Zain Iraq looking to roll out 3G network

Zain Iraq aims to reinvest 15 per cent of its revenues this year to build up its infrastructure.

The country's largest mobile operator in terms of revenue and subscribers plans to roll out a third-generation (3G) network once it receives the necessary spectrum from the country's communications and media commission (CMC).

"Our revenue for 2012 was US$1.73 billion [Dh6.35bn] and we are targeting double-digit growth for the coming years. Last year, Zain Iraq invested more than $200 million in expanding and modernising its network; this year we plan to invest 15 per cent of our revenue in the infrastructure," said Wael Ghanayem, the chief financial and operating officer at Zain Iraq.

Mr Ghanayem said the CMC was in the final stages of granting the operators the spectrum required for 3G. "A big investment will be required for 3G infrastructure. We are working with Ericsson, Nokia Siemens Networks and Huawei."

All three mobile operators in Iraq run 2G networks, which provides limited speed and capacity for mobile broadband connections. With 3G connectivity, data usage is expected to grow exponentially in the country.

"In Iraq data penetration is less than 10 per cent so there is huge potential for growth. In neighbouring countries, where they have 3G, data contributes 20 to 30 per cent to total revenues," said Mr Ghanayem.

Zain Iraq, a subsidiary of the Kuwaiti Zain Group, is working on launching its initial public offering in line with the terms of its licence issued in 2007. All three Iraqi mobile operators were required to float 25 per cent of their shares on the Iraq Stock Exchange (ISX). Asiacell is the only one to have completed its offering, raising $1.24bn last month.

"We are in the final stages of changing the company from a private one to a joint-stock company. Once we get the approval from the companies registrar there are other procedures we have to go through before listing on the ISX," said Mr Ghanayem.

The company is hoping to begin its share offering by the end of the first half of this year.

Mobile penetration in Iraq is about 80 per cent. In 2009, the market value of the telecoms sector in the country grew by 19 per cent, but last year growth slowed down to 12 per cent.

"Growth is there but slowly, we need new services like 3G to boost it. The World Bank has predicted 13 per cent GDP growth for Iraq compared to 2 to 3 per cent globally. The GDP per capita will grow and that will impact spending on telecoms services," said Mr Ghanayem.

At the end of last year, Zain Iraq had 13.7 million subscribers.